For many decades, inland areas of California have experienced faster population growth rates than coastal areas. Indeed, from 1950 to 2010 the Inland Empire (Riverside and San Bernardino Counties) experienced the most rapid rate of population growth in California. But now, for the first time since the 1860s, the Bay Area—long the slowest-growing urban region—is experiencing faster growth rates than any other region of the state.
Clearly, the Bay Area’s strong economy has led to this growth. With robust job gains and relatively high wages, demand to live in the Bay Area is very high. To some extent, local authorities and builders have responded to this demand with new housing construction, much of it multi-unit housing in densely populated areas. Population growth has been especially strong in Santa Clara and Alameda Counties, but San Francisco and San Mateo Counties are also outpacing the more suburban parts of the Bay Area, such as Sonoma and Solano Counties.
In contrast, inland areas are still recovering from the recession and housing bust that hit them hard at the end of the last decade. Declines in employment and very high rates of foreclosure were centered on these inland regions, including the Inland Empire, the San Joaquin Valley, and Sacramento.
Some might say this is not an important shift in regional growth patterns. After all, at 1.0 percent annual growth, Bay Area populations are not exactly exploding. But growth rates in the Bay Area are twice as high this decade as they were in the previous one, and no one expected the Bay Area to be the fastest-growing region of the state—according to long-term projections, inland areas will have faster growth rates than coastal areas. If recent patterns persist, this conventional wisdom will be turned on its head, and the implications for California’s future—from transportation infrastructure to water demand—could be enormous. As the economic recovery spreads throughout the state, it is reasonable to expect that inland growth will pick up, but to what extent and for how long is highly uncertain.
The effect of these revisions on the underlying employment trend is significant, with California adding jobs at an average annual rate of 3.0 percent during 2013. This is nearly double the rate that the government had previously reported (1.7%), and is significantly higher than the national rate. In fact, starting in the last quarter of 2012, California’s employment has grown at an annual rate that is 1.4 percentage points higher, on average, than the national rate. We have not seen a California-U.S. job growth gap of this order since 2009—and this time around, California is outpacing the nation. Relative to other states, the state’s job growth ranked third in 2013, surpassed only by North Dakota and Utah.
Job growth has been revised upward in most industry sectors. Traditionally, the revision process most impacts those industries experiencing unexpected growth. In 2013, those industries included health care, management, and construction. Jobs in health care and management grew 4.9 and 3.2 percentage points faster, respectively, than originally estimated. Previous estimates had not pegged either of these industries with the fastest job growth. Construction jobs grew at an average annual rate of 8 percent during 2013 (2.7 percentage points up from the initial estimate), which points toward a housing recovery that’s even stronger than expected.